5G Guru Predicts Rollout Disparity

A leading telecom expert reckons there is a mismatch between some of the ambitious 5G targets set by government authorities and the slow pace at which private sector operators are likely to roll out the next-generation technology.

Bengt Nordström, the CEO of consulting firm Northstream and a former C-level telco executive, thinks "mass" deployments of 5G are at least six years away and that many operators will be in no hurry to launch it.

Nordström was speaking to Light Reading on the same day the UK's National Infrastructure Commission (NIC) issued a report complaining about the state of the country's 4G networks and urging the government to take immediate steps on 5G planning or risk further disappointment. (See Eurobites: UK 5G Report Slams 4G Network.)

Meanwhile, the European Commission wants to see all European Union member states "targeting early [5G] network introduction by 2018 and moving toward commercial large-scale introduction by the end of 2020 at the latest."

Judging by Nordström's analysis, such goals are wholly unrealistic.

For one thing, the first 5G standard is not expected to materialize until 2018 and most industry figures do not envisage commercial deployments of that standard before 2020, at the very earliest.

Moreover, to provide much higher-speed services than on advanced 4G networks, 5G operators will need access to so-called millimeter-wave spectrum, which is not good for transmitting signals over long distances. As a result, those services are likely to be unavailable outside urban hotspots or "small cells" -- at least for the foreseeable future.

"That [small cell network] can never be as big as the macro basestation rollout of a new network in previous generations," says Nordström.

Perhaps more important is the lack of a clear business case for 5G technology while capital expenditure constraints are growing.

"There is one tangible business case in 5G and that is fixed wireless access," says Nordström. "Why would operators suddenly invest in a new technology if they don't understand the return on investment? It will not happen."

Although many telcos seem interested in using 5G mainly to support an Internet of Things (IoT) strategy, the Northstream boss remains unconvinced this would pay huge dividends. Future IoT sales will account for no more than 1% of revenues generated by most operators, he says, and for just 3-5% at the most successful companies.

By the time operators face a decision on 5G investment, of course, the gulf between soaring levels of data traffic and stagnating revenues will be even bigger, weakening the typical telco's capex capability.

All of this leads Nordström to express skepticism that a cycle of 5G spending will generate significant sales growth for equipment vendors such as Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK).

"I think we'll need 5G over time but it's not something that will generate a boost in revenues for operators or vendors," he says. "If I was a vendor planning for the next five or six years, my prayers would go on operators continuing to invest in 4G evolution -- not on them trialing 5G or increasing capacity in hotspot areas."

Operators certainly appear to be taking greater interest in more capable 4G technologies based on the LTE-Advanced Pro standard. Only this month, Nokia revealed that it has now signed 110 contracts with service providers for the rollout of its 4.5G technology, and it expects future improvements to support multi-gigabit-speed services. (See Nokia Boasts 4.5G Momentum With 110 Deals.)

But spending on these technologies, which rely on upgrades to existing LTE infrastructure rather than a network overhaul, will not prevent a revenue decline next year, as far as Nokia is concerned. The Finnish vendor last month predicted that its network sales would fall by about 2.2% in 2017. (See Nokia to Create Standalone Software Biz, Target New Verticals.)

Northstream is not the only company to suggest that government authorities may be heading for a 5G disappointment.

Following this morning's announcement from the UK's NIC, network operator Three UK flagged its usual unhappiness with a perceived spectrum imbalance in the UK market, having repeatedly complained that larger rivals BT Group plc (NYSE: BT; London: BTA) and Vodafone UK control most of the country's airwaves.

"One of the main causes of the UK's poor 4G coverage has been the historic imbalance in mobile airwaves," said 3 in a company statement. "We'll face the same issues with the rollout of 5G with consumers and businesses suffering as a result."

I don't think you get it. 28 Ghz Samsung 5G is a direct replacement of LTE, it has a cell radius of 2 km and fully supports vehicles cruising at highway speed, NTT Docomo tested Samsung 5G at 150 km/hr on a race track and verified its functionality. Samsung 5G is not a hotspot type system proposed by Ericsson and Nokia.

I understand Huawei and ZTE has no plans for mmwave 5G because China has no plans for mmwave 5G and has not invested any in its development, but just because Huawei and ZTE can't do it doesn't mean somebody else couldn't either.

Any network that deploys Samsung 5G has the ability to cover both fixed and mobile terminals, guaranteeing multi-gigabit bandwidth to individual subscriber due to Samsung 5G's spatial frequency recycling capability.

Re: Bengt Nordstrom is dead wrong I think the key word here is MASS. There is no denying that fixed wireless, 28GHz urban/stadium hot spots and some 5G initial launches will pop up before 2020. But would they have the same scale of impact as the MASSIVE LTE rollout in China/US that had happened in the past a couple of years? Unfortunately, no.

Only replacing or upgrading the macro network can create such mass rollout that could potentially turn around the revenue decline for the vendors. However, the spectral efficiency advantage of NR over LTE is anticipated to be about only 30%, which is hardly significant enough to convince the operators to replace their macro network in the sub-6GHz frequency bands. And no one will deploy a wide area network using the 28GHz, probably not even in Korea. In the end of the day, customers are not paying more for more capacity. The only tangible new revenue is in fixed wireless. But, call it 5G or not, fixed wireless is not a mass market.

Nevertheless, 5G is a newer platform, and as such it will continue to evolve and gradually enlarge its technical advantage over LTE. So if we give it a couple more years for 5G standard to mature and grow in handset penetration after being fully standardized in 2019/20 (Release 15 in 2018 defines only phase one initial specs), the macro network migration from LTE to 5G will eventually pick up.

Re: Bengt Nordstrom is dead wrong He may or may not be wrong but what about Verizon? They're talking 2017 for fixed 5G city pilots. If they work as expected then limited commercial launches won't be far behind.

Re: Guru? "Guru" is one of those words that headline writers like to use because (1) it's short, (2) it's all-purpose, and (3) it sounds funny. When I hear the word, I think of somebody who looks like a cross between Yoda and one of the Icelandic Yule Lads. Fortunately, the image doesn't fit Mr. Brown at all.

Guru? I watched our own Gabriel Brown give a talk on 5G at our Executive Summit in Rome last Thursday morning.

He was that good over 25 minutes that I sat there at the end fumbling for the right word to describe what I'd just seen and heard.

Other delegates will recall that a delegate from Vodafone was the first to request the microphone once Gabriel had finished. The fellow immediately came up with the word I had been looking for to describe what we had just been treated to.

Gabriel's presentation had been "astonishing" said the man from Newbury.

There you go.

That was the word I was looking for.

I'm not sure the term "5G Guru" is one that ought to be bandied about all that liberally on Light Reading. If it is, I would think it could reasonably be applied a little closer to home.

Bengt Nordstrom is dead wrong Mr. Bengt Nordstrom is dead wrong and there is in fact a race to be the first to deploy incompatible Samsung 5G and Chinese 5G network by 2020 in Asia. Ericsson and Nokia will be left out if they do assume that the full scale 5G deployment will not begin until 2022. Heck, KT's talking about launching its 28 Ghz 5G revenue service in 2019, to beat the Chinese.

The race to the first 5G deployment, driven by national prides and government industrial policies and not economic reasoning, is real.

South Korea's second largest mobile operator KT said it will complete the construction of a trial 5G network in parts of the country by September 2017 to prepare for a pilot service of the high-speed technology at the 2018 Winter Olympics.

China Mobile Communications Corp, the world's largest telecom carrier with 845 million mobile subscribers, is getting an early start to prepare for 5G networks.

The Beijing-based firm will select four to five cities in 2017 to build pre-commercial prototypes to verify and develop 5G systems. It is stepping up efforts to reach the goal of commercializing 5G services in 2020.